Positives And Negatives Of Private Loans For College 2019

Private Loans For College

Our office gets a number of questions from parents asking about the positives and negatives of private loans for college 2019 as different financial options researched. We believe the drawbacks are as following:

  1. Interest is often variable
  2. Less flexible repayment options
  3. The student may have to start making payments while they are still in school
  4. Higher limit on lending which will mean the student will be paying more interest
  5. The loan will be dependent on the student’s credit score
  6. If the lender requires a co-signer, the student may be putting that person at financial risk.

However, there is a positive in considering a private loan. Friendly terms! Over the last 2-3 years, I have been learning from some of our clients that they have secured a private loan with a lower interest rate than a Federal loan. For example, I talked to a client last week that retained a private loan at a 3% rate.

In summary, when looking at the positives and negatives of private loans for college 2019, I recommend the student and or the parent should contact local banks and credit unions to learn what they have to offer before utilizing any unsubsidized Federal loan and should never turn down a subsidized Federal loan. 

If you have additional questions or need information on how to lower college costs, please contact our office.

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